Last year's superstar asset – oil – is getting left in the dust as stocks roar in 2023, but there's still an energy play for investors who are focused on income. Indeed, the S & P 500 is up nearly 16% this year, while West Texas Intermediate crude is off by nearly 11%. Energy stocks are also this year's underdogs, with the S & P sector down more than 7%. However, a pocket of income potential has emerged in the form of master limited partnerships.
MLPs are managed by general partners who run the business, while limited partners – the investors – purchase interest in the partnership and feed it capital. In turn, the limited partners collect income distributions from the business. MLPs aren't subject to federal income taxes, but the limited partners are responsible for levies on the income they receive. This feature allows the partnership to pay a good yield.
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